How to Take Calculated Risks to Reduce Business Losses

Being a business owner means that you need to be willing to take risks. Risk defines entrepreneurialism but it is not all equal. That is where you need to take some time to make some decisions regarding which risks present the highest reward for the effort.

Risks can also leave you down and out with nothing but a heap of debt you need to pay off. That’s why risks need to be calculated in order to increase that chance of reward and ultimately success in business.

Think It Through

Always carefully think through everything before you take any sort of risk. Outweigh the pros and cons of those risks. If there are many pros, it makes sense to take on the risk if it means the possibility of reducing losses for your business. Along with carefully thinking through everything, you may also want to set goals for yourself and your business.

Set Goals

Write down specific goals for yourself and place dates for when you want to accomplish them. When you have goals put in place, you have something to work for and something that you are willing to take risks for, especially if you have a set deadline put in place. Be sure that your goals are realistic so that you can achieve them. Setting goals is so important in business, in fact you will not find a successful businessperson out there without them.

Make Clear Decisions

When you are at the very forefront of a risk and it ultimately falls on your shoulders, taking charge is a must. Taking charge means that you are responsible for organizing your thoughts and gathering them together and choosing which calculated risks should be taken for your business. If your risk makes sense, then take a deep breath and dive in.

Benefits of Taking Risks

Do not let fear get in the way if you are passionate about the direction of your goal. Your business growth depends on your willingness to try something new, even if it fails.

• Gain a competitive edge in the market – demands are always changing along with customer needs. If you are willing to take a risk when competitors or other businesses are not, people will remember you for it.
• Drive change to the market – what can your business do differently that no other business is doing with their products and services?
• Overcome fear of failing – you will feel empowered to break through limits that might be holding you back when you are wiling to take risks.
• Learn to trust more – as you overcome a fear of failure, it will instill a willingness to trust the process. Some risks might not pay off, but an optimistic risk-taker will look at a failure as an opportunity to learn.

Types of Risks Business Owners Should Expect

Understanding the type of risk you are taking and how it can affect your business is important. The following are examples of the different types of risk you can expect to take as a business owner:

• Market risk/systemic risk – this refers to the risk of loss due to the fluctuations in the market. A business owner should develop strategies that inform you of potential changes or disruptions to reduce risk.
• Competitive risk – direct or indirect competition that impacts your revenue of your business due to price, product, or marketing strategy.
• Credibility risk – risk that one faces when releasing a new product or service in the market.
• Technology risk – risk of losses that business owners face due to technology failures.
• Financial risk – risk that the company’s cash flow is not enough to meet its financial obligations.

The Bottom Line

It can be intimidating to take risks but by calculating the risk, you have the opportunity to push your business to new levels. Leaders and entrepreneurs in all industries innovate by the willingness to take risks.